19 Apr Save or Splurge: Questions to Ask before Splurging
All of us face those major expenses that fall under the category of “wants” rather than “needs.” And when you practice smart budgeting, there’s no reason that you shouldn’t treat yourself to those types of expenses every now and then. But how do you decide when it’s a good idea to splurge on something and when it might be better to save your money instead? Here is a look at some questions you should ask before splurging on something major.
Is this the best time to buy it?
How is this item priced now, compared to how it is priced at other times of the year? If you want to purchase a new TV, for example, you might want to want until the beginning of the year to buy it, as this is the time of year when name brand TVs see the highest markdowns.
Can I pay for this in full?
Home (and, perhaps, car) aside, stop and think before you use a credit card to pay for something you can’t afford to pay for in full right now. When you purchase something on credit, you’ll always end up paying more for it in the long run due to interest. If you can’t afford to pay for something in full right now, wait a few months—or however long it will take—so that you can pay for the item in full upfront.
How does my emergency fund look?
You should never put yourself in financial risk in order to finance something you want but don’t need. So, before splurging on anything major, ask yourself first if you’ll be prepared to handle medical bills or car expenses should they crop up unexpectedly shortly after.
Is there something more important I’d rather have?
Maybe you’re considering purchasing a new laptop for about $1,000. It would be nice to have, though your current laptop is suiting you fine. What might you do with that $1,000 if you didn’t purchase a laptop? Could that money go towards a down payment for a home that you are planning to buy a year from now? Would that money help you finance a few much smaller “wants” you have been eyeing, all while leaving you with hundreds of dollars left over? Before parting with your money, be sure to ask yourself if it is really the best use of your money to satisfy your “wants.” Sleep on it if you have to.
Will I be able to return this if I change my mind?
Sometimes you don’t know if you’ll be completely happy with a major purchase, and at those times it’s important to know that you will be able to get your money back. If you are investing in a new DSLR camera, for example, what are you going to do if you decide that it doesn’t change your photography game like you thought it would? Does the camera store you purchased it from have a flexible 30-day return policy? And what about furniture purchased online? Chances are returning it would involve some major shipping costs. Before splurging on anything major, ask yourself how easy it might be to return it if you change your mind. And if you know that returning it would be difficult, do your research first—even if that means visiting a store in-person, ordering swatches, renting it first, etc.